JAHANZAIB WAHLAH, MEMBER JUDICIAL-III .----This judgment will disposes of aforementioned (17) Customs Appeals filed by the appellants agains t Order-in-Original Nos.1393830 dated 03.07.2019, Order-in-Original No.1408969 dated 22.08.2019 Order-In-Original No.1408527 dated 21.08.2019, Order-In-Original No.1408578 dated 21.08.2019, Order-In-Original No.1408555 dated 21.08.2019. Order-In-Original No.1408594 dated 21.08.2019, Order-In-Original No.1408551 dated 21.08.2019. Order-In-Original No.1408975 dated 22.08.2019, Order-In-Original No.1408980 dated 22.08.2019, Order-In-Original No.1408546 dated 21.08.2019, Order-In- Original No.1407093 dated 16.08.2019, Order-In-Original No.1407086 dated 16.08.2019, Order-In-Original No.1407095 dated 16.08.2019, Order-In-Original No.1407096 dated 16.08.2019, Order-In-Original No.1408939 dated 22.08.2019, Order-In-Original No.1408987 dated 22.08.2019 and Order -In-Original No.1408590 dated 24.08.2019, passed by the Additional Collector of Customs (Adjudication-I), Kara chi. These 17 appeals involved identical issues of law and facts. In view of aforementioned position, the same were heard together and are being decided simultaneously through this common order in the light of judgment of the Hon'ble High Court of Sindh in Special Customs Reference Application No.157/2008 (S.M. Naqi son of Syed Muhammad Hussain, Karachi v.
Collector of Customs (Adjudication-I) and others, Karachi).
2. Since all the appeals have similar facts and grounds hence there is no need to discuss all the appeals. Brief facts of the Customs Appeal No.K.925/2019 as reported by the Directorate of Post Clearance Audit (Customs), Karachi received an information that certain importers are importing polyester lace from India and availing inadmissible benefit of SRO. 1274(1)/2006 dated 29.12.2006 by mis-declaring its classification. The scrutiny of past clearance data of the instant goods were started and the instant GD was selected for Audit. The audit of the instant GD revealed that the importer M/s. Ahmed Enterprises imported Garment Accessories (Assorted Design Multicolor Lace) from India and got the same cleared under PCT heading 5804.2900 and availed benefit of SRO 1274(1)/2006 dated 29.12.2006. However , the contents of examination report and images uploaded clearly reflect that the goods are made of polyester which is a manmade fiber and the goods are correctly classifiable under PCT heading 5804.2100 chargeable to Customs Duty @ 20% and where benefit of SRO 1274(I)/2006 dated 29.12.2009 is not admissible. An Audit Observation was accordingly issued to the importer for alleged evasion of duty and taxes through mis-declaration of classification and availing inadmissible exemption under SRO 1274(I)/2006 dated 29.12.2006 and causing a loss of revenue amounting to Rs. 1,035,260/-.
3. The importer responded electronically and manually through representative. Admittedly , the goods have been declared as Garment Accessories; Assorted Design Multicolor Lace and the consignment was cleared after due process of detailed checking / physical examination in terms of Section 80 of the Customs Act, 1969. In presence of Section 29 read with Section 80(3) of the Customs Act, 1969, merely on the basis of photo-images the specification of the raw material used in the manufacturing or to say description cannot be changed, therefore on this sole ground the said "observation" is liable to be withdrawn. Secondly , it is pertinent to mention here that the consignment "Laces" were mechanically made laces, where assorted types of yarns / fibers were used. According to the Explanatory Notes there are number of assorted types of yarns and fibers. The Section Note 2(A) of Section XI of the Explanatory Notes in the case of mixed textile material, the yarn/fiber which is pre-dominant by weight shall prevail for classification. The Chapter Note 2(A) further states that "When no one textile material predominates by weight is covered by the heading which occurs last in numerical order among those which equally merit consideration. Even otherwise the PCT Heading 5804.2900 is the applicable PCT Heading for the imported "Laces". The Laces are normally traded on the basis of their design and colour scheme. The definition of "LACE" given in sub-heading notes of 58.04 in the Explanatory Notes speaks as under "Lace is an ornamental or decorative openwork fabric in which desig n elements (more or less Intricate) formed by the Inter twisting of threads are joined either by meshes, usually of regular size and shape, forming an apparen t openwork ground fabric, or by ornamental links (brides) which themselves given pattern effects. The design eleme nts and background of mesh or brides are usually produced simultaneously but sometimes the design elements are made separately and assembled afterwards". Thus, the said definition of Explanatory Notes clearly speaks that "Laces" are usually manufactured with assorted yarn / fibers. As stated above all the consignments were released after physical examination by the Customs Examination staff and the examination report is not only confirming the declared description but also categorically stated that Assessment Group may check all aspects including PCT Heading. The Assessing Group, after checking all documents, including SAFT A Certificate, and the examination report / images, has confirmed the declared PCT Heading of 5804.2900. It may also be noted that the Indian Government / Customs authorities have also issued the SAFT A Certificate after detailed examina tion / checking of the exporter's declaration and confirmed the PCT Heading 5804.2900. All the consignments have been released after due verification of the SAFT A Certificates. In past couple of times, same sort of objections of PCT classification was raised but after thorough scrutiny and Lab testing the PCT of 5804.2900 has been confirmed in respect of two GD No.KAPW -HC-15351 1-08-01-2017 and KAPE-HC39058-25-08-2017, the contents of which clearly speaks that in the case of "Laces" made of mixed yarn / fibers, the. Note 2(A) of sub-heading 58.04's Explanatory Notes, shall apply and according to the said Explanatory Notes even in the presence of some portion of "Polyester" the PCT Heading of 5804.2900, instead of 5804.2100, shall be the applicable PCT Heading. The observation of the PCT Heading 5804.2100 on the ground of "Images" is nothing but a case based on surmises and presumptions.
4. As per contravention reported that the perusal of the reply submitted by the importer clearly reflects that the importer has failed to defend the objects raised in the audit observation regarding composition of the imported lace made of polyester which is a manmade fiber and its classification under appropriate PCT Heading i.e. 5804.2100.
Instead of addressing the objections raised on the constituent material whereby the ascertained PCT qualifies classification on the basis of its production of polyester and other yarns/fibers used in the manufacturing of lace. the importer has relies on the completion of assessment after examination of the consignment and scrutiny of documents including SAFT A certificate.
5. Show-cause notices issued and matter s were adjudicated. The learned adjudicat ing officer passed the impugned order on 04.07.2019 by holding that the goods are correctly classify above under PCT heading 5804.2100, therefore, the importer M/s. Ahmed Enterprises are ordered to pay amount of Rs. 1,035,260/- into the government treasury . It has been further hold by the learned adjudicating officer that since the offending goods have already been released, therefore, the same can not be confiscated at this stage, however , a penalty of Rs.100,000/- (Rupees One Hundred Thousands Only) is imposed on the importers in terms of clause 14 of section 156(1) of the Customs Act, 1969.
6. The appellants being aggrieved by the subsequent impugned orders filed instant appeals before the Tribunal on the grounds that the imported consignments of "Laces" were mechanically made laces, where assorted types of yarns fiber were used and according to the Explanatory Notes there are number of assorted types yarn and fibers.
According to the Section Note 2(A) of Section XI of the Explanatory Note in the case of mixed textile material the yarns / fiber which is pre-dominant by weight hall prevail for classification. The Chapter Note '2(A) further states, "'When no one textile material predominates by weight is covered by heading which occurs last in numerical order among these which equally merit consid eration:" Therefore, even otherwise the PCT Heading 5804.2900 is the applicable PCT Heading for imported "Laces". Moreover , the Laces are normally traded on the basis of their design and colour scheme. The definition of "Lace" given in sub-heading notes of 18.04 in the Explanatory Notes speaks as under "Lace is an ornamental or deco rative openwork fabric in which design elements (more or less intricate) formed by the interwisting of threads are joined either by meshes -- usually of regular size and shape, forming an apparent openwork ground fabric, or by ornamental links (brides) which themselves given pattern effects. The design elements and background of mesh or brides are usually produced simultaneously but sometimes the design elements are made separately and assembled afterwards. " Thus, the said definition of Explanatory Notes clearly speaks that "Laces" are usually manufactured with assorted yarn / fibers, which includes "Synthetic" as well as "natural", "metallic" and etc. A similar contravention was filed by the Collectorate of Port Qasim with the Collector of Customs (Adjudication-I), however , the learned Adjudicating Authority who after listening to the similar arguments vacated the allegations vide Order-in-Original No.780/2018-19. Therefore, keeping in view tile facts / circumstances of the case and legal aspects indeed the Respondent No.1 initially decided the case rightly , however , prima facie due to the administrative pressure the Respondent No.1 was forced to change the stance. The actions of the Respondent are in violation of rights of the appellant enshrined under Articles 4, 10A, 18 and 37 of the Constitution of Pakistan, 1973. The learned counsel for the appellant prayed that the impugned Order-in-Original No.1393830 dated: 03.07.2019 has been issued without lawful authority hence liable to be set aside.
7. No cross objections were filed by the respondents despite directions during hearings. During hearing it was, however admitted by the DR that the identical 35 cases / appeals have been decided by the Appellate Tribunal, vide Judgment dated 15-10-2019, passed in Appeals Nos. K-346 to 348 / 2019 and K-744 to 755/2019 and also accepted that the department has not been able to obtain any "stay order" from the Appellate Court in terms of Section 196 of the Act. However , despite the legal position, the learned D.R. Mr. Arif Maqbool, Assistant Director , appeared and straight away argued the case. The learned DR forcibly contended that the importers have cleared the goods under the PCT Heading 5804.2900 by availing benefit of SRO 1274(I)/2006 dated 29-12-2006. He further contended that as per examination report and images uploaded clearly reflects that the goods are made of polyester and manmade fiber, therefore, correctly classifiable under PCT heading 5804.2100 chargeable to Customs Duty @ 20% and benefit of above SRO is not admissible and the Audit observation has correctly been issued for evasion of duty and taxes through mis-declaration of classification. Kept pending for an indefinite period as such I have no other choice but to decide the appeal the case on the basis of available record.
8. I have gone through record of the case. At the outset keeping in view the cardinal principles of jurisprudence in the absence of any contradictory findings / order from the Appellate Authority in the identical case, where the points of law and facts are the same, the Tribunal or any other equivalent Court has no reasons to deviate from its earlier order / judgment unless the concerned party point out any obvious mistake. Admittedly , the subject appeals are identical to the appeals disposed of vide . Tribunal's earlier judgment dated 15-10-2019. However , for the sake of the arguments and satisfaction of the concerned parties to the subject appeals, it is reiterated that the instant case revolves around the PCT classification of the "Laces" imported from India. The "Laces" made of man-made fibre / yarns", are classifiable under PCT Heading 5804.2100 and the "Laces" made of other than manmade fibres / yarns", are classifiable under 5804.2900. Though the standard rates of duty / taxes of both PCT headings is same, however , by virtue of SRO 1274(1)/2006 dated: 29-12-2006, which is for imports from the SAARC countries, the duty reduced to concessionary rate of 5% as against the standard rate of 20%. The Directorate of PCA alleged that according to the examination report and images the imported "Laces" are looks to be made of "man-made fibres" instead of declared "Assorted Design Multicolour Laces", thus, correctly classifiable under PCT Heading 5804.2100 instead of 5804.2900, hence, the benefit of SRO 1274(1)/2006 has been incorre ctly obtained by the appellants from the Customs. The crux of the Collectorates ground of appeal are that the constituent material of the imported "Laces" cannot be ascertained just on the basis of naked-eye inspection unless the samples are thoroughly inspected checked and such checking may also includes Laboratory test, when need arises. In support of the argument the representative (AR) of the importer has cited evidential GDs, i.e. (1) KPPI-HC-24340-28-09- 2018, (ii)
KPPI-HC-25837-05-10-2018, (iii) KPPI-HC-37449-214-1 1- 2018, (iv) KAPE-HC-39058-25-08- 2017 and (v) KAPW - HC-13351 1-05- 01-2017, whereby despit e the examination report mentioning "Polyester the words, however , at "review" stage, in terms of Rule 441, of the Customs Rules, 2001, the "Laces" were got tested from the Customs Laboratory , who confirmed that the "Laces" are made of mixed yarns, including cotton, metalized, etc. The record of the aforesaid GDs, submitted by the appellants confirms that after receipt of lab report, the Assessing Officers satisfied that the imported "Laces" are / were made of "Mixed" yarns, including cotton, metalize, polyester , etc., and the assessment was made under the declared PCT Heading of 5804.2900. The PCT Heading 5804.2100 only covers the "Laces" made of man-made fiber, thus, the "Laces" made of mixed Yarn, including natural Yarn / non- man-made fiber , would be classified in the category of other under PCT Heading 5804.2900.
9. The appellants have also submitted a copy of Order-in-Appeals Nos.1478 to 1480/2018 dated: 18-09-2018, whereby the learned Collector (Appeals), in the similar three cases of GD No. (i)KA PE-HC184193-20-04-2018, (ii)
KAPE-HC-183872-20-04-2018 and (iii) KAPEHC-189489-28-04- 2018, has given the findings that without a lab test report and / or the thorough examinat ion of the samples by the Assessing Officer, the PCT Heading of "Laces", made of "mixed materials", including cotton, metalized, polyester , etc., thus, according to the un-deniable evidences such "Laces", made of assorted mixed material, are correctly classifiable under PCT Heading 5804.2900 and this/practice of assessment is quite regularly followed by the Collectorates. The D.R has no rebuttal to this fact and infact admitted that the department has not filed any appeal against the orders passed in favour of the appellants. Further , keeping in view the fact that the SAFT A Certificate, as required by the Customs authorities, while allowing concession / exemption in ' terms of SRO 1274(1)/2006, were issued by the Customs / Government authorities of India after thorough checking and the said SAFT A Certificate also confirming the declared PCT Heading of 5804.2900. The SAFT A Certificate has been invariably verified through web-site channel by the Collectorates; thus, the confirmation / findings of the SAFT A Certificate cannot be discarded merely on presumptions based on the images see at a belated stage / long period after clearance of the goods.
10. In view of the above, I agree with the findings of the Collector (Appeals)'s in the aforesaid Order-in-Appeal as well as the findings of the Collector (Adjudication-I), passed in Order-in-Original No. 780/2018-2019 dated: 11-02- 2019, and I am also of the firm opinion that mere naked eye inspection of the photo images after clearance of the goods cannot be made basis to determine the PCT Heading of the "Laces", which were admittedly made of different design / made of different material / yarns, thus, in the presence of SAFT A Certificate and the assessments finalized by the appropriate assessing officers under Section 80 of the Customs Act, 1969, and also keeping in view the practice of assessment of "Laces" of mixed yarn, I do not find any substance in the "Audit Observation / Contravention" report of the Directorate of PCA, which are hereby based on presumption after clearance of the goods. Resultantly , all these appeals are allowed to the extent of setting aside the Order-In- Originals, being uncalled for and unwarranted by law having been passed in an arbitrary and capricious manner .
11 Judgment passed and announced accordingly .